A Donor’s Divine Intervention

Financier takes steps to keep fund on spiritual course

While attending Yale University during the Depression, John M. Templeton was forced to scrap for his Ivy League

education. The 22 bales of cotton his father had set aside for him at their rural Tennessee home — rewards for the semiannual, straight A-dominated report cards his son received — wouldn’t bring enough money to pay his tuition. So, Mr. Templeton studied hard to retain his academic scholarships. And he learned a new way to make money.

“I played a lot of poker with the wealthy boys and built up a separate bank account to pay for my college expenses,” recalls Mr. Templeton, the financier and philanthropist who is now 90. “Playing poker was the best education I could have gotten for a career on Wall Street. It taught me how to make the best use of my time and how to calculate odds quickly.”

Seven decades later, Mr. Templeton is wealthy in his own right — his net worth is estimated at $700-million. But as he looks to the future of the foundation he created, Mr. Templeton has little interest in gambling.

Renowned during a financial career built on taking chances — he pioneered a daring global investment strategy and managed high-yielding mutual funds — Mr. Templeton has sought to reduce the risk that sometimes surrounds the handing down of a foundation. Worried that other grant-making institutions have veered away from the intentions of their founders, he has taken steps to devise what he hopes is an ironclad strategy for keeping his foundation on course after he dies, when it probably will become one of the largest 75 foundations in the United States, with assets of $800-million. Perhaps the most unusual: He has set up a system to oust top staff members who deviate from the grant-making direction now in place.

Focus on Spirituality

Formed in 1987 and later bankrolled with part of the $914-million Mr. Templeton made from the sale of his investment company in 1992, the John Templeton Foundation doles out more than $20-million per year, most of which goes to researchers who attempt to find evidence of the divine by using the tools of science. Templeton-supported research typically investigates spirituality’s effects on health and behavior, and how such concepts as love and altruism are affected by a person’s religious beliefs. (A smaller percentage of grants goes to groups that promote the teaching of the free-enterprise system and programs that attempt to build character in young people.)

Before he formed his foundation, Mr. Templeton, a devout Christian steeped in the Bible during his youth in Tennessee, created the Templeton Prize for Progress Toward Research or Discoveries About Spiritual Realities in 1972. At $1.1-million, the prize is one of the largest private research awards and has been used by Mr. Templeton to publicize his quest for a scientific understanding of the nature of God and the potential value of spirituality as a subject for scientific inquiry. Although past winners include Mother Teresa and the Rev. Billy Graham, recipients in recent years have been scientists and academics who have explored the cosmos and animal worlds for what Mr. Templeton sees as signs of divinity, such as generosity.

Although the foundation’s grant making has rankled some in academe and the nonprofit world who believe that science and religion are mutually exclusive disciplines, or that its money could be better spent on social problems, such as poverty, Mr. Templeton remains steadfast in his belief that connecting science and religion will lead to discoveries that improve life on earth. “Through the centuries, charities have focused on education, healing, and helping the poor,” says Mr. Templeton. “We look at ways to prevent sickness and poverty through spiritual knowledge.”

Maintaining a Donor’s Intent

When looking toward his foundation’s future, Mr. Templeton revisits the histories of some grant makers, such as the John D. and Catherine T. MacArthur Foundation, in Chicago, and the Ford Foundation, in New York, which he believes provide cautionary tales for those who may soon be passing their foundations along to others.

“In MacArthur’s case, they simply said spend the money however the trustees want to,” Mr. Templeton says. (A MacArthur spokeswoman confirms that the foundation was set up so that trustees could revise its grant making.) Large foundations, such as Ford, “sprinkle money around to various causes. It’s not as cost-effective as concentrating in an area where people aren’t putting any money,” says Mr. Templeton.

To guarantee that the foundation’s grant-making focus remains strong, Mr. Templeton says he made sure that foundation literature and legal papers were crystal clear regarding the foundation’s mission and his vision for its future.

Says one of the governing documents: “The major intentions of the Founder are: (i) to encourage new spiritual information and spiritual research to increase as rapidly as medical information did in the 20th Century; (ii) to encourage the world to spend at least one-tenth as much resources on research for new spiritual information as the world spends on all science research; and (iii) to encourage the idea that less than 1 percent of spiritual reality is yet known by humans, just as less than 1 percent of the cosmos was known before Nicolaus Copernicus…. For progress in religion, the Foundation shall always encourage open-minded research and never advocate any particular religious theme or argument.”

Seeking to Exist Forever

Because spiritual knowledge is so limited, Mr. Templeton says, the foundation should continue in perpetuity so that the field can make appreciable gains in the next century. To ensure that the judgments of the foundation’s officials and trustees reflect the direction he has set for them, Mr. Templeton has developed what he and others say is a novel system of checks and balances.

Three outside auditors chosen by Templeton trustees from research and religious organizations will review the foundation’s grant making every five years.

If the reviewers determine that Mr. Templeton’s dictates have been violated, foundation officials will have one year to correct problems.

If the auditors determine that corrections haven’t been made after one year, foundation leaders will be replaced by others chosen by trustees.

Checks on the foundation’s 12 trustees lie in the annual elections held by the foundation’s members, as it calls its inner circle of leaders.

Five members are from the Templeton family, while others include past Templeton Prize winners and officials from organizations that share part of the elder Mr. Templeton’s vision, such as the Heritage Foundation, a conservative think tank in Washington.

To help retain the foundation’s character in the future, Mr. Templeton appointed leaders who echo its core values of piety, moral character, and free enterprise, says John M. Templeton Jr., president of the foundation since its inception and the eldest of John Templeton Sr.’s three children.

He adds that while he has an interest in charities that fall outside the foundation’s mission, he won’t use its money to back them once his father is gone.”It’s not my foundation, or my money,” the younger Mr. Templeton says. “I view what I do as stewardship of the foundation’s money.”

Even though John Templeton Jr. acts as the foundation’s president, his father’s succession scheme doesn’t spare him from scrutiny. Now 63, the younger Mr. Templeton must step down at age 78 to make way for new, younger leadership.

Besides making sure that his intent is clear, the elder Mr. Templeton has also set up foundation branches offshore, where laws governing the distribution of foundation assets are less stringent.

The branches, in the Cayman Islands and in the Turks and Caicos Islands, are not far from the Bahamas, where Mr. Templeton, known as “Sir John” there after being knighted by England’s Queen Elizabeth II, lives. The foundation’s headquarters remains in Radnor, Pa., a suburb of Philadelphia.

“I thought it was important to diversify geographically, so that political strife in one country couldn’t wipe out the foundation’s work,” says Mr. Templeton.

Foundation documents specify that if any government wants to interfere with the grant maker’s operations, as happened to some philanthropists in Nazi Germany during World War II, assets will be transferred to one of the other foundation branches.

Providing a Guide

Those who counsel philanthropists say Mr. Templeton’s approach is unusual.

“It’s very rare for a donor to provide a detailed blueprint that can offer a foundation direction over many, many years,” says Melissa A. Berman, president of Rockefeller Philanthropy Advisors, in New York. “Most merely leave behind a record of what the foundation has done,” which serves as a model for a founder’s successors.

Ms. Berman says that Mr. Templeton’s strategy avoids some of the major dilemmas that can arise when the work of a foundation is left to survivors. “It’s best if the founder lays these thoughts out in his own voice, so those who follow him have something to guide them,” says Ms. Berman, whose organization manages trusts and foundations, and offers advice to donors on giving. “The problems we’ve seen have occurred when the founder left no instructions, or when a legacy is defined in terms that are so narrow that they don’t allow for flexibility.”

Some grant makers have defined their missions so rigidly that their ability to respond to needs after the founder has died are hindered, she adds.

Because of its unusual mission, the Templeton Foundation shouldn’t worry about retaining too much flexibility as far as its direction is concerned, Mr. Templeton says. To increase the knowledge of spiritual matters by a hundredfold in the next century, the foundation will have to stay the course.

Avoiding ‘Mission Creep’

Mr. Templeton’s approach is applauded by Adam Meyerson, president of the Philanthropy Roundtable, a Washington association of grant makers. “The history of the modern American foundation is a sad story of trustees and staff contradicting, and sometimes explicitly violating, the intent of the original donors,” Mr. Meyerson says, adding that Mr. Templeton has come up with a novel way of protecting his interests in spiritual knowledge.

Although Mr. Templeton has said he wants his foundation to exist in perpetuity, Mr. Meyerson says that other donors might want to consider a sunset provision to guarantee that his or her intent won’t eventually be subverted, as former U.S. Treasury Secretary William E. Simon did when he formed a foundation in the early 1980s. Mr. Simon was following in the footsteps of many donors who wanted to make sure their dollars wouldn’t be used for causes beyond what the donor would have supported.

“Dad wanted to avoid the mission creep he saw at Ford and MacArthur,” says William E. Simon Jr., co-chairman of the William E. Simon Foundation, in Santa Monica, Calif.

He adds that the work of the foundation started by his late father will end when he and his siblings are dead. The annual William E. Simon Prize for Philanthropic Leadership, given this year to Mr. Templeton to honor his support for encouraging cooperation between the worlds of science and religion, will continue in perpetuity, however, he adds.

Mr. Simon lauds the Templeton Foundation for its contributions to a new brand of scientific research, and for its originality.

“Templeton doesn’t march with the crowd,” says Mr. Simon. “Someone once said that philanthropy is the herd of independent minds. Templeton’s doing something different. We’ll see if it works or not.”

Charles L. Harper Jr., executive director of the Templeton Foundation, says that the foundation’s approach mirrors the risk taking, forward thinking, and uniqueness of its founder, who has eschewed taking well-trodden paths in grant making for unmarked ones. “There’s always been eccentricity in philanthropy — that’s one of its glories,” says Mr. Harper. “In philanthropy, you have to see the world as it could be.”

Mr. Templeton says his vision goes beyond the few years of most foundation-backed programs for a reason.

When Isaac Newton made discoveries in physics three centuries ago, he had no idea that they would lead to electronics and telephones, he says. Similarly, Mr. Templeton believes, humanity is just beginning to discover the nature of the divine.

“We only know about 1 percent of what there is to know about God right now,” says Mr. Templeton. “Who knows what our vision of God can be in 100 years?”

THE JOHN TEMPLETON FOUNDATION

Purpose and areas of support: The foundation backs research designed to investigate spiritual matters and the boundaries between science and religion, as well as programs that promote character development and the teaching of the free-enterprise system. The foundation also oversees the annual Templeton Prize for Progress Toward Research or Discoveries About Spiritual Realities. Valued at $1.1-million, the prize is one of the largest research awards in the world.

History: Created in 1987 by John M. Templeton, who amassed hundreds of millions of dollars trading in global stocks and managing mutual funds.

Assets: Approximately $700-million divided among three locations: Radnor, Pa. (headquarters), the Cayman Islands, and the Turks and Caicos Islands.

Grants and operating programs: The foundation distributes more than $20-million in grants annually, and has a goal of making $40-million available per year to researchers and teachers within the next seven years. In 2001, the foundation received 463 proposals and awarded 124 grants.

Key officials: John M. Templeton, founder; John M. Templeton Jr., president; Charles L. Harper Jr., executive director.

Application procedures: Grant proposals are accepted year-round. Grant requests should include a cover letter, a full proposal, a detailed budget, résumés of key staff members who would be working on projects financed by Templeton, supporting materials, and a letter outlining how grant money would be spent in a cost-effective way.

Address: 5 Radnor Corporate Center, Suite 100, 100 Matsonford Road, Radnor, Pa. 19087.

Web site: http://www.templeton.org.